Through its various subsidiaries, the Salt Lake City-based Zions Bancorporation provides a full range of banking and related services in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Utah, and Washington. Its primary holding, Zions First National Bank, operates 150 branch offices, 214 ATM’s, and has assets of $8.5 billion. All together, Zions’ collection of banks has over 400 branch offices. The company has grown quickly since the early 1990s by acquiring other banks and expanding existing operations.

Keystone Insurance and Investment Co., the precursor to Zions Bancorporation, was incorporated in Utah in 1955 by a group of investors for the purpose of acquiring the Lockhart Corporation. In addition to Lockhart’s financial holdings, during the next few years Keystone purchased an insurance agency and about 120 acres of land in an industrial park. When Keystone went public in 1960, it was worth about $2 million.

In 1960, a group of investors, the chief of which was Keystone, purchased a controlling share of Zions First National Bank. A holding company, Zions First National Investment Co., was incorporated in Nevada to own the bank. The holding company’s name was changed to Zions Utah Bancorporation in 1965. The holding company went public in 1966 when existing stockholders sold their shares. In 1971, Zions Utah Bancorporation merged into Keystone, with Keystone becoming the surviving company. Keystone subsequently changed its name to Zions Utah Bancorporation.

Zions chief holding, Zions First National Bank, was a leading local bank in Salt Lake City. Prior to the buyout by Keystone and its associates, the bank was principally owned by the Latter-day Saints Church. Renowned Mormon leader Brigham Young had started the bank in 1873 to serve the church and local community. Throughout the late 1800s and through the mid-1900s, Zions had close ties to the Mormon Church, taking deposits from, and providing loans to, church members as well as handling many of the church’s financial transactions.

Growth Under Simmons’ Direction: 1960s-80s

The group of investors that bought out the church’s ownership interest in First National in 1960 was headed by Roy W. Simmons. Simmons was a Mormon with a strong banking background. Both his father and grandfather had worked in banking and had served as officers of the competing First National Bank of Layton, near Salt Lake City. Under Simmons’s direction, First National prospered during the 1960s and 1970s. Besides emphasizing its core Salt Lake City market, the bank expanded into rural Utah and eventually amassed a regional network of branches throughout the northern part of the state.

By the 1980s, First National had cemented a position as the second largest banking organization in the state of Utah, earning Simmons a reputation as a savvy banker and businessman. “Roy has an uncanny knack for figures and sizing up a situation,” Lawrence Adler, president of the Utah Bankers Association, told Knight-Ridder/Tribune Business News, adding, “He’s a banker from the old school.”

In addition to running one of the region’s most successful banks during the 1960s and 1970s, Simmons successfully helped raise his family, sending four sons to Harvard. One of his sons, Harris, would follow in the footsteps of the three generations before him. Harris Simmons was born in 1955, about five years before his father lead the buyout of First National and assumed leadership of the bank. He began his banking career at
age 16 as a teller filing canceled checks. When he returned from Harvard, he went to work with First National and was named assistant vice-president at Zions Utah Bancorporation in 1981.

Although Zions achieved steady gains during the 1960s and 1970s, it was during the 1980s that the bank would realize its heady expansion. Zions’ success was due in part to management strategies and in part to trends in the banking industry. By the late 1970s, banks began to feel competition from non-bank financial institutions. The new competitors were vying for consumer dollars that had traditionally gone to bank deposits and were also competing as lenders and financiers. Because of restrictive bank industry regulations passed through Congress in the wake of a flurry of bank failures during the Depression era, banks had been functioning at a disadvantage to their competitors. But during the mid 1960s and early 1970s, Congress eliminated some of the restrictions and created a variety of favorable tax incentives for specific banking activities. During that period, a number of bank holding companies like Zions were created to take advantage of deregulation and to begin participating in a number of non-banking-related financial markets.

Opportunities and Challenges: Mid- to Late 1980s

Nevertheless, Zions and other banks suffered because of interstate banking restrictions. For example, General Motors was free to offer consumer financing for its vehicles throughout the United States, thus benefitting from various economies of scale. In contrast, most of the activities of Zions and other bank holding companies were confined to a single state or region. In the mid-1980s, Congress allowed bank holding companies to engage in interstate banking. That legislation, combined with other banking industry dynamics, set the stage for a period of rampant growth that would double Zions’ size by the mid-1990s.

By the time interstate banking regulations were loosened, the industry was already experiencing rapid consolidation. The new legislation only served to intensify the trend. The percentage of U.S. assets held by commercial banks dropped from about 37 percent in the late 1970s to 25 percent by the late 1980s. That reduction left many competitors scrambling for business. To survive, banks began merging to achieve economies of scale. The number of independent banking entities in the United States dropped from about 13,000 in 1983 to less than 10,000 by 1990. Meanwhile, the number of multi-bank holding companies like Zions grew from about 300 to around 1,000.

Augmenting the consolidation trend was the fact that computers and electronic banking devices were increasingly making it easier for banks like Zions to operate across broad regions. Thus, Zions’ growth strategy in the 1980s was relatively straight forward. It wanted to acquire smaller competitors and integrate them in the Zions Utah Bancorporation system. Besides working to improve the performance of the banks it purchased, Zions’ managers would reduce aggregate operating costs by amassing a large network of branches in a multi-state region. The savings would result from economies of scale related to marketing, reporting, and management overhead at the executive level.

Harris Simmons assumed his father’s position as president of Zions Bancorporation in 1986. Roy Simmons became chairman of the company and retained his chief executive title. In January 1986, Zions entered the Arizona banking market by opening a commercial loan branch of its Zions First National Bank in Phoenix. The branch started out with one man, Clark Hinckley, in a hotel room and expanded rapidly with Zions’ financial backing. In October 1986, Zions purchased Mesa Bank and changed the name of its Arizona operations to Zions First National Bank of Arizona. Zions added a third branch to its Arizona operations with the 1987 acquisition of Camel Bank. Also in 1987, the holding company shortened its name to Zions Bancorporation reflecting expansion efforts outside of Utah.

After adding millions of dollars of assets to its portfolio in Utah, Nevada, and Arizona, Zions Bancorporation seemed to be growing at a healthy clip going into the late 1980s. Unfortunately, souring commercial real estate markets and general economic malaise in the late 1980s hurt Zions and many other banks. But problems at Zions were compounded by a downturn in the local copper industry.

Though some of Zions’ properties remained profitable, the company struggled through the late 1980s. Zions’ Nevada and Arizona operations sustained profitability, generating combined earnings of about $1.8 million in 1986 and $2 million in 1987. In contrast, Zions of Utah stumbled. It posted a profit of $24 million in 1986, but then reported a loss of $14.1 million in 1987. The next year brought a loss of $17.9 million. The losses were so bad that Roy Simmons suspended his $191,000 chairman’s salary in 1988 and cut his officer’s pay. Nevertheless, Zions continued to pay dividends to its shareholders throughout the slump.

As many of its competitors became mired in nonperforming real estate loans, Zions recovered in 1989 as local markets perked up and its loan portfolio improved. Zions’ net income rose to nearly $18 million, and the company stepped up its acquisition efforts. Because the banking industry was in such a slump during the early 1990s and capital was hard to come by, Zions was presented with several good investment opportunities. Harris Simmons became chief executive in 1991. Under his direction, the bank cautiously took advantage of several of those opportunities.

Company Perspectives:

Our goal is to create value. Value for our customers. Value for the communities we serve. Value for our employees. And, most importantly, value for our shareholders. Creating shareholder value must be a preeminent objective, since the support of our owners, whose capital has been entrusted to us, is essential to our very existence as an independent enterprise. The creation of enduring shareholder value requires that we achieve consistently superior risk-adjusted returns on capital, and that we achieve healthy, strong earnings growth.

Acquisitions and New Markets in the Early 1990s

Among Zions’ most notable acquisitions during the early 1990s was National Bancorp of Arizona, a $435 million institution
based in Tucson. That purchase made Zions the seventh largest banker operating in the state. Zions moved up a notch in the rankings with the subsequent purchase of $107 million Rio Salado Bancorp. That purchase gave Zions a total asset base of about $630 million in Arizona by 1993 and extended its reach into Phoenix, Tucson, and Flagstaff. Although it emphasized expansion in Arizona, Zions added holdings in Utah as well. Similarly, Zions expanded its Nevada State Bank in Las Vegas, increasing its total number of branches to 19 by early 1994.

Perhaps Zions’ most interesting purchase during the early 1990s was Discount Corporation of New York, a dealer in U.S. government securities. Observers questioned the deal, but Simmons believed it was a shrewd move. “I spent a couple of days explaining to analysts and stockholders that we weren’t crazy,” Simmons told Knight-Ridder/Tribune Business News. The subsidiary allowed Zions to begin repackaging and secu-ritizing the loans that it made, rather than selling them in secondary markets. Most banks sell the home mortgages that they make to an investment house, which packages several mortgages and sells them as securities. The investment house makes money on the sales and the originating banks continue to make money servicing the loans. By bringing the securitizing process in-house, Zions was able to reap profits from both sides of the business. Discount Corporation made Zions one of only two primary dealers in government securities headquartered in the western United States. And it complemented Zions’ expanding lending operations related to student loans, mortgages, credit card receivables, and other consumer financing.

The Discount Corporation acquisition revealed Simmons’s penchant for innovation. For example, Zions was one of only a few lenders that had chased the accounts receivable lending business. Zions would extend credit to customers on the backing of the accounts receivables of their business. Viewing it as labor intensive, most banks shunned the niche. However, Zions set up a separate division to serve the market and found much new business in the mid-1990s. Another area where Zions was a recognized innovator was in opening branch offices in grocery stores. The bank was also one of the first to begin securitizing small business loans.

Although Zions changed radically during the 1980s and early 1990s, one part of its business that did not change was its tie to the Mormon Church. Many people still thought of Zions as the “Mormon Bank” in the mid-1990s because of its long-time affiliation with the church. The church continued to be one of Zions’ largest single customers. Zions had a separate “missionary remittance office” that handled electronic transfer funds to missionaries at the Mormon Church’s 285 worldwide missions.

Besides expanding through acquisition, increasing its fee services, and innovating new profit centers, Zions achieved significant gains during the 1990s by streamlining internal operations and tightening controls. The combined results of Zions’ strategy was strong revenue growth and even greater profit gains, suggesting a bright future for the holding company. As Zions Bancorporation’s asset base grew from $3 billion in 1989 to nearly $4.5 billion in 1993, the company’s net income surged to $26.6 million in 1990 and to $53 million in 1993. By 1994, Zions was operating about 125 branches in its three states and was involved in negotiations to acquire other banks in Arizona and Utah. In addition, it provided insurance, data processing, credit, and consumer lending services through several subsidiaries.

Success and Growth Continue: Mid-1990s and Beyond

By 1995, brokerage firm Dean Witter Reynolds had ranked Zions as the best-performing regional bank in the United States. During that year, the company’s stock price almost doubled based on the company’s return on equity. The success continued into 1996 as net income reached $101.3 million. Southern Arizona Bank was acquired that year, and the company also established Zions Agricultural Finance to originate and service loans for the Federal Agricultural Mortgage Corporation.

Zions’ acquisition strategy continued into the latter half of the 1990s and into the new millennium. Tri-State Bank, with branches in Montpelier and Paris, Idaho, was purchased in 1997 along with Sun State Capital Corporation and California-based GB Bancorporation, whose holdings included Grossmont Bank. Overall, the company expanded its reach from three states to seven. Zions moved aggressively into Colorado during 1998, buying a host of small banks, including Kersey Bancorp, Citizens Banco Inc., and First National Bank of Alamosa.

The firm also eyed California for its growth potential. As such, Sumitomo Bank of California was added to its arsenal in 1998 along with First Pacific National Bank. Sumitomo, First Pacific, and Grossmont Bank were then merged together and renamed California Bank and Trust. The new subsidiary stood as the fifth-largest commercial bank in California with assets of $6 billion.

Key Dates:

1955:

Keystone Insurance and Investment Co. is incorporated in Utah.

1960:

Keystone and Roy W. Simmons purchase a controlling share in Zions First National Bank; Zions First National Investment Co. is formed to act as a holding company for the bank.

Sun State Capital Corp and California-based GB Bancorporation are purchased.

1998:

Zions buys Sumitomo Bank of California and First Pacific National Bank.

2000:

Plans to acquire First Security Corp. fall through.

In 1999, Zions laid the groundwork for perhaps its most significant deal to date. By teaming up with First Security Capital Markets Inc.—the largest banking company in Utah—Zions planned to create the 20th-largest bank holding company in the United States, with assets of $40 billion. The merger was thwarted however, after First Security reported a major drop in
its first quarter earnings during 2000. Zions’ shareholders rejected the proposed deal shortly thereafter.

The failed merger did little to dampen Zions’ spending spree. During 2001, the company added the following companies to its holdings: Draper Bancorp, Eldorado Bancshares Inc., the Arizona branches of Pacific Century Financial Corp., Minnequa Bancorp (a Utah-based branch of Washington Federal Savings), a municipal finance advisory business, and icomXpress, a workflow and electronic process management solutions provider. IcomXpress was renamed Lexign and became a key component of Zions’ e-commerce business segment.

Zions’ strategy appeared to pay off. Between 1996 and 2000, the firm’s revenue had nearly doubled, and during 2001 the firm was named Utah’s top revenue growth company by Mountain West Venture Group. The company was also added to Standard & Poor’s 500 Index that year as net income soared to $283 million, increasing nearly 75 percent over the previous year.

During 2002, the company faced challenges related to a slowing economy. Zions’ e-commerce unit was hit especially hard as technology spending fell off. As such, its Digital Signature Trust unit was sold. Cuts were also made at its Lexign division, and the firm toyed with the idea of a possible divestiture. Despite this setback, management remained positive about the company’s future. While Zions’ stellar growth appeared to have momentarily slowed, the financial services company was positioned to remain a leader among its peers for years to come.

Principal Subsidiaries

California Bank & Trust; The CommerceBank of Washington; National Bank of Arizona; Nevada State Bank; Vectra Bank Colorado; Zions First National Bank.

Zions Bancorporation is the second largest multibank holding company in Utah. Through its various subsidiaries, the Salt Lake City–based Zions provides a full range of banking and related services primarily in Utah, Arizona, and Nevada. Its primary holding is Zions First National Bank based in Salt Lake City. The company has grown quickly since the early 1990s by acquiring other banks and expanding existing operations.

Keystone Insurance and Investment Co., the precursor to Zions Bancorporation, was incorporated in Utah in 1955 by a group of investors for the purpose of acquiring the Lockhart Corporation. In addition to Lockhart’s financial holdings, during the next few years Keystone purchased an insurance agency and about 120 acres of land in an industrial park. When Keystone went public in 1960, it was worth about $2 million.

In 1960, a group of investors, the chief of which was Keystone, purchased a controlling share of Zions First National Bank. A holding company, Zions First National Investment Co., was incorporated in Nevada to own the bank. The holding company’s name was changed to Zions Utah Bancorporation in 1965. The holding company went public in 1966 when existing stockholders sold their shares. In 1971 Zions Utah Bancorporation merged into Keystone, with Keystone becoming the surviving company. Keystone subsequently changed its name to Zions Utah Bancorporation.

Zions chief holding, Zions First National Bank, was a leading local bank in Salt Lake City. Prior to the buyout by Keystone and its associates, the bank was principally owned by the Latter–day Saints Church. Renowned Mormon leader Brigham Young had started the bank in 1873 to serve the church and local community. Throughout the late 1800s and through the mid–19008 Zions had close ties to the Mormon Church, taking deposits from, and providing loans to, church members, and handling many of the church’s financial transactions.

The group of investors that bought out the church’s ownership interest in First National in 1960 was Roy W. Simmons. Simmons was a Mormon with a strong banking background. Both his father and grandfather had worked in banking and had served as officers of the competing First National Bank of Layton, near Salt Lake City. Under Simmons’s direction, First National prospered during the 1960s and 1970s. Besides emphasizing its core Salt Lake City market, the bank expanded into rural Utah and eventually amassed a regional network of branches throughout the northern part of the state.

By the 1980s, First National had cemented a position as the second largest banking organization in the state of Utah, earning Simmons a reputation as a savvy banker and businessman. “Roy has an uncanny knack for figures and sizing up a situation,” Lawrence Adler, president of the Utah Bankers Association, told Knight–Ridder/Tribune Business News. “He’s a banker from the old school.”

In addition to running one of the region’s most successful banks during the 1960s and 1970s, Simmons successfully helped raise his family, sending four sons to Harvard. One of his sons, Harris, would follow in the footsteps of the three generations before him. Harris Simmons was born in 1955, about five years before his father lead the buyout of First National and assumed leadership of the bank He began his banking career at age 16 as a teller filing canceled checks. When he returned from Harvard, he went to work with First National and was named assistant vice president at Zions Utah Bancorporation in 1981.

Although Zions achieved steady gains during the 1960s and 1970s, it was during the 1980s that the bank would realize its heady expansion. Zions’ success was due in part to management strategies and in part to trends in the banking industry. By the late 1970s, banks began to feel competition from nonbank financial institutions. The new competitors were vying for consumer dollars that had traditionally gone to bank deposits, and were also competing as lenders and financiers. Because of restrictive bank industry regulations passed through Congress in the wake of a flurry of bank failures during the Depression era, banks had been functioning at a disadvantage to their competitors. But during the mid 1960s and early 1970s, Congress eliminated some of the restrictions and created a variety of favorable tax incentives for specific banking activities. During that period, a number of Bank holding companies like Zions were created to take advantage of deregulation and to begin participating in a number of nonbanking–related financial markets.

Nevertheless, Zions and other banks suffered because of interstate banking restrictions. For example, General Motors was free to offer consumer financing for its vehicles throughout the United States, thus benefitting from various economies of scale. In contrast, most of the activities of Zions and other bank holding companies were confined to a single state or region. In
the mid 1980s, Congress allowed bank holding companies to engage in interstate banking. That legislation, combined with other banking industry dynamics, set the stage for a period of rampant growth that would double Zions’s size by the mid–1990s.

By the time interstate banking regulations were loosened, the industry was already experiencing rapid consolidation. The new legislation only served to intensify the trend. The percentage of U.S. assets held by commercial banks dropped from about 37 percent in the late 1970s to 25 percent by the late 1980s. That reduction left many competitors scrambling for business. To survive, banks began merging to achieve economies of scale. The number of independent banking entities in the United States dropped from about 13,000 in 1983 to less than 10,000 by 1990. Meanwhile, the number of multi–bank holding companies like Zions grew from about 300 to around 1,000.

Augmenting the consolidation trend was the fact that computers and electronic banking devices were increasingly making it easier for banks like Zions to operate across broad regions. Thus, Zions’s growth strategy in the 1980s was relatively straight forward. It wanted to acquire smaller competitors and integrate them in the Zions Utah Bancorporation system. Besides working to improve the performance of the banks it purchased, Zions’s managers would reduce aggregate operating costs by amassing a large network of branches in a multi–state region. The savings would result from economies of scale related to marketing, reporting, and management overhead at the executive level.

Harris Simmons assumed his father’s position of president of Zions Bancorporation in 1986. Roy Simmons became chairman of the company and retained his chief executive title. In January of 1986, Zions entered the Arizona banking market by opening a commercial loan branch of its Zions First National Bank in Phoenix. The branch started out with one man, Clark Hinckley, in a hotel room and expanded rapidly with Zions’s financial backing. In October of 1986, Zions purchased Mesa Bank and changed the name of its Arizona operations to Zions First National Bank of Arizona. Zions added a third branch to its Arizona operations with the 1987 acquisition of Camel Bank. Also in 1987, the holding company shortened its name to Zions Bancorporation reflecting expansion efforts outside of Utah.

After adding millions of dollars of assets to its portfolio in Utah, Nevada, and Arizona, Zions Bancorporation seemed to be growing at a healthy clip going into the late 1980s. Unfortunately, souring commercial real estate markets and general economic malaise in the late 1980s hurt Zions and many other banks. But problems at Zions were compounded by a downturn in the local copper industry.

Though some of Zions’s properties remained profitable, the company struggled through the late 1980s. Zions’s Nevada and Arizona operations sustained profitability, generating combined earnings of about $1.8 million in 1986 and $2 million in 1987. In contrast, Zions of Utah stumbled. It posted a profit of $24 million in 1986, but then reported a loss of $14.1 million in 1987. The next year brought a loss of $17.9 million. The losses were so bad that Roy Simmons suspended his $191,000 chair–man’s salary in 1988 and cut his officer’s pay. Nevertheless, Zions continued to pay dividends to its shareholders throughout the slump.

As many of its competitors became mired in nonperforming real estate loans, Zions recovered in 1989 as local markets perked up and its loan portfolio improved. Zions’s net income rose to nearly $18 million, and the company stepped up its acquisition efforts. Because the banking industry was in such a slump during the early 1990s and capital was hard to come by, Zions was presented with several good investment opportunities. Harris Simmons became chief executive in 1991. Under his direction, the bank cautiously took advantage of several of those opportunities.

Among Zions’s most notable acquisitions during the early 1990s was National Bancorp of Arizona, a $435 million institution based in Tuscon. That purchase made Zions the seventh largest banker operating in the state. Zions moved up a notch in the rankings with the subsequent purchase of $107 million Rio Salado Bancorp. That purchase gave Zions a total asset base of about $630 million in Arizona by 1993 and extended its reach into Phoenix, Tuscon, and Flagstaff. Although it emphasized expansion in Arizona, Zions added holdings in Utah, as well. Similarly, Zions expanded its Nevada State Bank in Las Vegas, increasing its total number of branches to 19 by early 1994.

Perhaps Zions’s most interesting purchase during the early 1990s was Discount Corporation of New York, a dealer in U.S. government securities. Observers questioned the deal, but Simmons believed it was a shrewd move. “I spent a couple of days explaining to analysts and stockholders that we weren’t crazy,” Simmons told Knight–Ridder/Tribune Business News. The subsidiary allowed Zions to begin repackaging and secu–ritizing the loans that it made, rather than selling them in secondary markets. Most banks sell the home mortgages that they make to an investment house, which packages several mortgages and sells them as securities. The investment house makes money on the sales and the originating banks continue to make money servicing the loans. By bringing the securitizing process in–house, Zions was able to reap profits from both sides of the business. Discount Corporation made Zions one of only two primary dealers in government securities headquartered in the western United States. And it complemented Zions’s expanding lending operations related to student loans, mortgages, credit card receivables, and other consumer financing.

The Discount Corporation acquisition revealed Simmons’s penchant for innovation. For example, Zions was one of only a few lenders that had chased the accounts receivable lending business. Zions would extend credit to customers that was backed by the accounts receivables of their business. Viewing it as labor intensive, most banks shunned the niche. But Zions set up a separate division to serve the market, and found much new business in the mid–1990s. Another area where Zions was a recognized innovator was in opening branch offices in grocery stores. The bank was one of the first to begin securitizing small business loans.

Although Zions changed radically during the 1980s and early 1990s, one part of its business that did not change was its tie to the Mormon Church. Many people still thought of Zions as the
“Mormon Bank” in the mid-1990s because of its long-time affiliation with the church. The church continued to be one of Zions’s largest single customers. Zions had a separate “missionary remittance office” that handled electronic transfer funds to missionaries at the Mormon Church’s 285 worldwide missions.

Besides expanding through acquisition, increasing its fee services, and innovating new profit centers, Zions achieved significant gains during the early 1990s by streamlining internal operations and tightening controls. The combined results of Zions’s strategy was strong revenue growth and even greater profit gains, suggesting a bright future for the holding company. As Zions Bancorporation’s asset base grew from $3 billion in 1989 to nearly $4.5 billion in 1993, the company’s net income surged to $26.6 million in 1990 and to $53 million in 1993. By 1994, Zions was operating about 125 branches in its three states and was involved in negotiations to acquire other banks in Arizona and Utah. In addition, it provided insurance, data processing, credit, and consumer lending services through several subsidiaries.

Principal Subsidiaries

Nevada State Bank; Zions First National Bank; Zions First National Bank of Arizona.